Korea's auto industry braces for Trump’s massive tariffs in Mexico

South Korean automotive and car parts manufacturers are bracing for potential disruptions in their Mexican operations as US President-elect Donald Trump vows to enforce stricter tariffs and cut back on preferential treatment for goods produced in the region.

According to industry sources on Tuesday, the Industry of Trade, Industry and Energy recently met with six companies – namely Kia, Hyundai Mobis and LG Innotek – to discuss the impact of Trump’s proposed tariffs.

“Mexico is a region where we should consider changes in trade policies of the upcoming US administration as well as the Mexican government,” Trade Minister Cheong In-kyo was quoted as saying during the meeting. “We will closely monitor these policies and work to minimize business uncertainties for our companies by operating cooperative channels with the Mexican federal and state governments.”

The ministry said that as of the second quarter of this year, Korea had invested $1.4 billion in Mexico, making it the world’s seventh-largest investor in the region. In 2022 and 2023, it was ranked 15th and 10th, with investments of $700 million and $900 million, respectively.

Notably, Kia’s car manufacturing plant and Hyundai Mobis’ auto parts facility in Monterrey have served as key points in North American supply chains. Kia, in particular, was reportedly considering producing compact electric vehicles as early as next year, aiming to sell cars eligible for EV consumer subsidies outlined in the Inflation Reduction Act. In January, LG Innotek announced its plans to expand the capacity of its Queretaro plant, which manufactures camera modules, motors and sensors for cars, by next year.

“Although we cannot disclose detailed information (during the meeting with the industry ministry), we will look into possible production adjustments, if necessary,” said a company official familiar with the matter on the condition of anonymity.

Korea’s heightened vigilance comes after Trump’s campaign pledge to renegotiate the United States-Mexico-Canada Agreement in 2026 to save American manufacturing. This agreement offers preferential tariffs to exporters, importers and producers within the three regions.

The President-elect also vowed Monday that he would impose massive 25 percent tariff hikes on all products imported from Mexico and Canada on the first day of his administration in January next year.